What is a primary demand of a 'close loop contract'?

A close loop contract typically emphasizes the importance of maintaining and improving the use of products throughout their lifecycle, which inherently places greater performance demands on logistics and maintenance. This type of contract often involves partnerships where the supplier is responsible for not only providing products but also ensuring their efficient maintenance, repair, and eventual recycling or disposal.

In a closed-loop system, the focus is on sustainability and resource efficiency, which necessitates that logistics operations must be optimized to handle products in ways that support these goals. This might include managing returns, repairs, refurbishments, and tracking materials throughout their life cycle. The intention is to create a seamless integration of various processes that often requires elevated standards for performance in logistics and maintenance compared to more traditional contracts.

Larger inventories, reduced performance expectations, and easier contract management do not align with the core requirements of a closed-loop contract, where the focus is on maximizing value and efficiency through rigorous operational standards.